Sterling finishes marginally up against euro

The pound strengthened by 0.08 cents (0.07%) against the euro yesterday to close the day at 1.1761.

• In early trading yesterday sterling strengthened against the euro, after the Confederation of British Industry reported that the UK’s financial service companies were more optimistic now than at any point in the last two years.
  
• Elsewhere, a report released by property intelligence company, Hometrack, which showed the annual fall in house prices in England and Wales slowed for the third consecutive month in June, also helped the pound’s cause.
  
• Finally, strong London equities drove sterling’s gains yesterday. The FTSE 100 eventually finished up 53.02 (1.25%).
  
• In trading so far today the pound has risen sharply against the euro as improved sentiment towards the UK economy continues.
  
• There are no major announcements due in the eurozone today, whilst in the UK revised first-quarter GDP and current account figures are out at 09.30 BST.

Sterling up after CBI survey

The pound strengthened by 0.44 cents (0.27%) against the US dollar yesterday, finishing the day at $1.6567.

• In early trading yesterday sterling rose against the dollar, after a report released by the property company Hometrack showed the annual pace at which house prices in England and Wales were falling slowed for the third successive month.
  
• Together with the news from the CBI that British financial service companies were more positive now than at any time in the last two years, this report stoked sentiment towards the UK’s chances of recovery, benefiting the pound as a result.
  
• However, the pound’s gains were capped by the news that Chinese officials were not looking to diversify their reserve currency holdings any time soon. This was positive news for the dollar, following months of debate about the use of an alternative global currency to the greenback.
  
• In trading so far today the pound has resumed its rise against the greenback as improved risk appetite continues to sweep the market.
  
• There are important announcements due on both sides of the Atlantic today. In the UK, revised first-quarter GDP and the latest current account figures are out at 09.30 BST, whilst in the US CB Consumer Confidence data is out at 15.00 BST.

Euro strengthens after confidence survey

The euro strengthened by 0.26 cents (0.18%) against the US dollar yesterday to close the day at $1.4081.

• In early trading yesterday the euro rose slightly against the dollar as gains on global equity markets stoked appetite for riskier currencies.
  
• In addition, a better-than-expected eurozone consumer confidence survey for June released by the European Commission buoyed demand for the single currency. It revealed a rise to 73.3 points this month from 70.2 points in May.
  
• However, the news that Chinese officials had ruled out any sudden changes in their foreign exchange reserve policy stemmed the dollar’s falls. Most of China’s currency reserves are held in US Treasuries.
  
• In trading so far today the euro has resumed its rise against the greenback as improved risk appetite continues to sweep the market.
  
• There are no major announcements due in the eurozone today, whilst in the US CB Consumer Confidence data is out at 15.00 BST.

Aussie weakens after falls on equity markets

Sterling strengthened against the aussie yesterday after a drop in local stocks reduced demand for the higher-yielding currency.

• Following mixed cues from Wall Street on Friday, Australian stocks fell yesterday, weakening the higher-yielding aussie as a result. A drop in oil prices also weakened the Australian currency.
  
• Important retail sales and building approvals data are out in Australia overnight tonight, with revised UK first-quarter GDP and current account figures out at 09.30 BST this morning.

Kiwi gains on business survey

The kiwi rose against the pound yesterday after a report showed growing optimism amongst New Zealand’s business community.

• A report released by ANZ National Bank Ltd. spurred the kiwi’s gains yesterday, after it revealed New Zealand businesses became more optimistic in June. A net 8.3% of companies surveyed said they expected sales and profit to increase over the next 12 months, compared with 5.5% last month.
  
• However, strong London equities capped the kiwi’s gains to some extent, although it still finished comfortably up after enduring losses at the end of last week.
  
• Important UK revised GDP and Current Account data is out at 09.30 BST today.

Sterling up against euro on data-less Friday

Sterling strengthened by 0.52 cents (0.44%) against the euro on Friday, closing the day at 1.1753.

• In early trading on Friday sterling strengthened against the euro as traders took their lead from strong London equities.
  
• With little data out, Friday also gave investors the chance to reflect on some important economic announcements out earlier in the week. Bank of England Governor Mervyn King’s cautionary comments on Wednesday dampened demand for sterling, however the European Central Bank’s one-year refinancing plan announced the same day also caused jitters in the market.
  
• This resulted in a volatile day’s trading, with the pound eventually heading higher as traders reassessed their views from earlier in the week.
  
• In trading so far today the pound is down very slightly against the single currency as investors look ahead to this week’s important announcements, including the European Central Bank’s interest rate decision on Thursday.
  
• There are no major announcements due in the UK or eurozone today.

Pound up over 1.5 cents vs. US dollar

The pound rose sharply against the US dollar on Friday, finishing the day up 1.54 cents (0.94%) at $1.6523.

• In early trading on Friday the dollar weakened against sterling, during a day light on data. Strong London equities helped the pound’s cause early on, as did investor reaction to the US Fed’s monetary policy announcement late on Wednesday.
  
• The Fed’s clear hint that there would be no interest rate rises for the rest of this year spurred demand for higher-risk currencies like the pound on Friday, as investors looked beyond the US for assets which could offer better returns.
  
• However, gloomy growth forecasts released by the OECD earlier in the week, as well as Mervyn King’s downbeat testimony last Wednesday, capped sterling’s gains.
  
• In trading so far today the pound has fallen against the greenback, despite a CBI survey released this morning suggesting the UK financial sector is more upbeat now than at any time in the last two years.
  
• There are no major announcements due in the UK or US today.

Euro finishes up over $1.40

The euro rose against the US dollar for the second day in a row on Friday, closing up 0.69 cents (0.49%) at $1.4055.

• In early trading on Friday the euro strengthened against the dollar, after strong gains on European equities improved investor risk appetite.
  
• In addition, the US Fed’s clear indication on Wednesday that interest rates would not increase for the rest of this year prompted investors to look elsewhere for higher-yielding assets. There had been some talk in the market before their latest meeting that a rate rise may be on the cards following some positive data, however the Fed’s cautionary announcement dampened these hopes, weakening the dollar as a result.
  
• In trading so far today the euro has dipped against the greenback as investors look ahead to some important economic announcements out this week.
  
• There are no major announcements due in the eurozone or US today.

Aussie ends 3-day rally vs. sterling

The aussie fell against the pound on Friday, ending a three-day rally as limited data and falls on global equity markets reduced investor appetite for riskier currencies.

• With little data out, Friday gave traders a chance to reassess last week’s economic releases. Bank of England Governor Mervyn King’s gloomy testimony on Wednesday contributed to sterling’s falls mid-week, however there was a feeling on Friday that the UK currency may have been oversold, helping it gain ground.
  
• There are no major announcements due in the UK or Australia today, so traders will take their lead from equities and broader market movements.

Kiwi weakens after weak GDP data

The kiwi weakened against sterling on Friday after disappointing New Zealand first-quarter GDP data hit demand for the South Pacific nation’s currency.

• The news that New Zealand’s economy had shrank by 1.0% in the last quarter was poorly taken by the markets, as they were expecting a 0.7% contraction. This fuelled speculation that the Reserve Bank of New Zealand may have to cut interest rates further.
  
• There are no major announcements due in the UK or New Zealand today, so investors will likely take their direction from broader market movements.

Pound weakens after King's comments

The pound weakened by 0.76 cents (0.65%) against the euro yesterday to close the day at 1.1701.

• In early trading yesterday sterling weakened against the euro after London equity markets turned lower initially.
  
• Bank of England Governor Mervyn King’s dovish assessment on Wednesday also pushed sterling lower mid-morning, after he said the UK’s economic recovery could still be a ‘long, hard slog’ despite more encouraging data recently. This led investors to believe the central bank had no intention of tightening its policy anytime soon.
  
• In addition, the Organisation for Economic Cooperation and Development’s bleak prediction the day before that Britain’s economy would contract 4.3% this year and stagnate in 2010 kept up the downward pressure on sterling.
  
• In trading so far today the pound has dipped slightly lower against the euro as investors continue to digest some important announcements out this week.
  
• There are no major announcements due in the UK or eurozone today.

Sterling weakens after key announcments

Sterling weakened by 0.35 cents (0.21%) against the US dollar yesterday, finishing the day at $1.6369.

• In early trading yesterday the pound weakened against the dollar after the US Fed’s monetary policy decision the day before was generally viewed positively by the markets. Its decision not to expand its asset purchase program was taken as a sign the deep US recession was easing. However, its clear indication that interest rates would stay low for some time dampened expectations of early rate rises, capping the greenback’s gains to some extent.
  
• Also weighing on the pound were Mervyn King’s cautionary comments on Wednesday which, together with a gloomy OECD report about Britain’s growth prospects, reduced investor appetite for sterling-denominated assets.
  
• The dollar received an added boost mid-afternoon after a government report showed the number of US workers filing new claims for jobless benefits unexpectedly rose last week. This prompted several investors to buy into the perceived safe-haven of the greenback.
  
• In trading so far today the pound has risen slightly against the greenback, as investors continue to digest this week’s economic releases.
  
• There are no major announcements due in the UK or US today.

Volatile day ends with euro up

The euro strengthened by 0.59 cents (0.42%) against the dollar yesterday to finish the day at $1.3986.

• In a choppy day’s trading yesterday the euro first weakened then strengthened against the dollar, as investors digested Wednesday’s major announcements.
  
• The European Central Bank’s 442 billion euro injection of one-year funds into money markets on Wednesday received a mixed reaction yesterday, after a record 1,121 banks took up their offer.
  
• Similarly, the US Fed’s decision to leave interest rates on hold and not extend their quantitative easing program produced equal uncertainty in the market. Some took their decision to ‘wait-and-see’ as a positive sign the recession was easing, whereas others were disappointed that the bank effectively ruled out interest rate rises for the rest of this year.
  
• These differing viewpoints resulted in a volatile day’s trading, with both currencies swinging into positive and negative territory. The dollar’s cause was helped mid-afternoon, however, after worse-than-forecast US jobless data reduced investor’s appetite for risk. Nevertheless, the euro finished the day slightly up.
  
• In trading so far today the euro has once again broken through the $1.40 barrier, as investors continue to pick over this week’s economic announcements.
  
• There are no major announcements due in the US or eurozone today.

Aussie strengthens vs. pound for third straight day

The aussie strengthened against the pound for the third straight day yesterday, after gains on Asian stock markets and rises in the price of oil and gold buoyed demand for higher-risk currencies.

• Rises in the price of gold and oil, Australia’s third- and fourth-most valuable commodity exports respectively, drove the aussie’s gains yesterday.
  
• In addition, dovish comments from the Bank of England Governor Mervyn King on Wednesday, together with a gloomy report from the OECD the same day, downgrading the UK’s growth prospects, hit the pound.
  
• There are no major announcements due in either Australia or the UK today so traders will take their lead from broader market movements.

Kiwi strengthens despite poor GDP figure

The kiwi again strengthened against sterling yesterday, despite worse-than-expected New Zealand first-quarter GDP figures overnight.

• New Zealand’s statistics bureau reported a fall in GDP by 1% last quarter, far worse than the 0.7% analysts had been expecting. This stirred speculation the Reserve Bank of New Zealand may cut interest rates further from a record low of 2.5%.
  
• Nevertheless, the kiwi strengthened after gains on Asian stock markets overnight which, together with downbeat comments from Bank of England policymakers, made the kiwi more attractive to investors than sterling.
  
• There are no major announcements due in either the UK or New Zealand today, with today’s trading likely to be dictated by reaction to last night’s New Zealand GDP figure.

US rate and quantitative easing program left unchanged

In a scheduled announcement, the US Fed left interest rates on hold and decided not to extend its quantitative easing program last night. It also repeated that that borrowing costs would remain exceptionally low for some time to come. Its decision to ‘wait-and-see’ on its quantitative easing program was based on the fact it believed the pace of economic contraction was slowing. This news was taken positively by US investors and has so far buoyed the dollar against sterling, however that is as much to do with Bank of England Governor Mervyn King’s dovish comments last night, as the Fed’s announcement. Struggling London equities have also aided the greenback’s ascent this morning.

Sterling strengthens despite King's dovish comments

Sterling strengthened by 0.91 cents (0.78%) against the euro yesterday to close the day at 1.1777.

• In early trading yesterday the pound strengthened against the euro, as investors speculated that Bank of England Governor Mervyn King would say the UK’s recession is bottoming out in his testimony to the Treasury Committee later that day. When it came, however, King said he was ‘more uncertain now than ever’ about the UK economy, forcing sterling lower in late trading as some traders booked profits from earlier gains.
  
• Elsewhere, investors broadly shrugged off disappointing CBI realised sales data out mid-morning, which showed no change in the pace of decline from May to June. This was in line with analyst expectations, however.
  
• In trading so far today the pound has dipped against the single currency as investors continue to digest yesterday’s announcements, including a downbeat report about the UK’s chances of recovery by the OECD.
  
• There are no major announcements due in the UK or eurozone today.

US Dollar strengthens vs. GBP after Fed decision

The pound weakened by 0.48 cents (0.29%) against the US dollar yesterday, finishing the day at $1.6404.

• In early trading yesterday sterling rose against the greenback, as the US currency came under broad selling pressure in the build-up to the US Fed interest rate decision later that day. Investors were convinced the Fed would quell recent speculation of a possible interest rate rise later this year, a move which analysts believe would sting the dollar.
  
• Sterling’s rise was little affected by CBI realised sales data out mid-morning, which revealed UK retail sales fell at the same pace as the previous month.
  
• However, dovish comments from Bank of England Governor Mervyn King capped sterling’s gains in late trading after he said he had genuine concern about how quickly the UK economy would pick-up from the recession.
  
• Finally, the Fed’s decision to leave interest rates on hold and not extend its quantitative easing program because of a slowing in the pace of economic contraction was taken positively by investors, who bought into the greenback as a result.
  
• In trading so far today the pound has risen against the dollar as investors continue to pick over yesterday’s announcements.
  
• There are no major announcements due in the UK today, whilst in the US there are three notable economic releases: Unemployment Claims and annualised first-quarter GDP data is out at 13.30 BST, whilst at 15.00 BST Fed Chairman Ben Bernanke is due to testify in front of a House committee.

Fed's decision hits euro vs. USD

The euro weakened by 1.49 cents (1.06%) against the US dollar yesterday to close the day at $1.3927.

• In early trading yesterday the euro fell against the dollar, after the European Central Bank announced it would lend 442.24 billion euros to banks in its first ever one-year refinancing operation.
  
• After briefly heading into positive territory, the single currency then fell against the dollar despite a US government report showing durable goods orders unexpectedly rose 1.8% in May.
  
• Finally, the US Fed’s decision to leave interest rates on hold and not extend its quantitative easing program plunged the single currency further into the red. Its decision to ‘wait-and-see’ after a slowing in the pace of economic decline recently prompted traders to buy into the greenback.
  
• In trading so far today, the euro has risen against the dollar as investors continue to dissect yesterday’s important announcements.
  
• There are no major announcements due in the eurozone today, whilst in the US Unemployment Claims and annualised first-quarter GDP data is out at 13.30 BST. At 15.00 BST Fed Chairman Ben Bernanke is set to testify in front of a House committee.

Aussie gains ground after CB data

The Australian dollar gained further ground against sterling yesterday, posting gains for the third straight day as investors bought back in to higher-yielding currencies.

• A recovery on the FTSE and a rally on the Dow Jones yesterday encouraged investors to shun safe haven currencies and buy back in to higher yielders, such as the aussie and kiwi.
  
• The aussie also gained support overnight from the release of the Conference Board Index, which increased in April for the third consecutive month.
  
• The aussie dollar is likely to remain attractive to investors for some time, as Australia currently has the highest yield amongst all the developed countries, with the RBA unlikely to cut interest rates further.

Kiwi up after BoE Governor's comments

The kiwi strengthened against the pound yesterday, after poor retail sales data and dovish comments from the head of the UK’s central bank reduced investor appetite for sterling.

• Sterling weakened in early trade against the kiwi yesterday after CBI realised sales data revealed no slowing in the pace of decline in UK retail sales from the previous month.
  
• These falls were extended after Bank of England Governor Mervyn King said he was ‘more uncertain now than ever’ about the UK economy.
  
• Trade today will be dictated by anticipation of New Zealand’s latest GDP figure, released tonight.

Sterling falls vs. euro on flat FTSE

Sterling fell by 0.99 cents (0.84%) against the euro yesterday to close the day at 1.1686.

• In early trading yesterday sterling dropped by over a cent against the euro, after a tumble on US stocks overnight prompted London equities to head lower initially.
  
• The pound fell despite better-than-expected figures released by the British Bankers’ Association, which showed the number of mortgages approved for house purchases in May rose 15.8% on a year earlier, ending months of annual declines. However, approvals remain well below historical averages.
  
• In trading so far today the pound has continued its slide against the euro, as investors eye the large amount of data out today.
  
• There are no major economic releases due in the eurozone today, whilst in the UK there are a series of announcements out. At 11.00 BST, CBI Realised Sales are out, followed by Inflation Report Hearings at 14.30 BST. Finally, Bank of England Governor Mervyn King is due to give a speech at 15.45 BST.

Sterling edges ahead of US Dollar after choppy day's trading

In a choppy day’s trading yesterday, sterling strengthened by 1.07 cents (0.65%) against the US dollar to finish at $1.6452.

• In early trading yesterday the pound weakened against the dollar after heavy falls on US and Asian stock markets overnight rocked risk appetite.
  
• However, recurring concerns about reserve currency diversification helped the pound yesterday, after ratings agency Moody’s said one threat to the US’s triple-A sovereign credit rating would be if it lost its status as the world’s primary reserve currency.
  
• Investors were nevertheless cautious about taking on large positions ahead of the US Fed’s latest interest rate decision due later today, capping sterling’s gains.
  
• In addition, sterling also lost momentum against the greenback after US data showed sales of previously owned homes in the country rose at a slower-than-expected pace in May.
  
• In trading so far today, the pound has continued its rise against the dollar as investors prepare themselves for a raft of data out today.
  
• In the US, Core Durable Goods Orders (MoM) are released at 13.30 BST, followed by New Home Sales at 15.00 BST. Finally and most importantly, at 19.15 BST the US Fed gives their latest interest rate announcement and statement. In the UK, CBI Realised Sales are out at 11.00 BST, followed by Inflation Report Hearings at 14.30 BST. Lastly, Bank of England Governor Mervyn King is set to give a speech at 15.45 BST.

Euro up over 2 cents vs. US Dollar

The euro rose considerably against the euro yesterday, strengthening 2.1 cents (1.51%) to close the day at $1.4076.

• In early trading yesterday the single currency rose sharply against the greenback, after European equity markets stabilised following steep falls on US equities overnight. On Monday, the DOW suffered its worst one-day loss in two months.
  
• The dollar also fell as the market awaited the outcome of a US Fed policy meeting later today, and a record $104 billion in US debt issuance this week. Traders will be watching closely to see what the Fed says about the economic outlook and its debt-buying programme, with markets skittish over the possibility of dovish comments.
  
• The single currency’s gains were also slightly capped by US housing data released mid-afternoon, which showed a slower-than-forecast rise in sales of previously owned homes.
  
• In trading so far today the euro has continued its rise against the greenback, as investors brace themselves for some important announcements out in the US.
  
• First, Core Durable Goods Orders (MoM) are released at 13.30 BST, followed by New Home Sales at 15.00 BST. Finally, the US Fed is to deliver its latest interest rate announcement and statement at 19.15 BST.

Aussie makes small gains over sterling

The aussie made small gains against the pound yesterday, as investors wait on the sidelines ahead of the Federal Reserve’s policy decision due this evening.

• The US Fed is set to issue a statement after its latest policy meeting at 19.15 BST today, with some investors suggesting the central bank may try and curb speculation of any policy tightening this year.
  
• Traders are also wary of taking large aussie positions at present, as they are undecided about whether recent weakness in equity markets was just a short-term pull-back, or the start of a more protracted decline.

Kiwi makes strong gains vs. sterling as equities flat

The New Zealand dollar made strong gains against sterling yesterday, gaining 2.75 cents against the pound as investors reconsidered riskier assets.

• A flat day on London equities, following heavy falls the day before, led investors to sell the pound and the US dollar to buy back into higher-yielding currencies.
  
• Today, investors will turn their attention to the raft of economic releases out in the UK and US.

Polish zloty in choppy trading, rate decision tomorrow

It was a choppy week’s trading between sterling and Polish zloty last week, with economic releases first weakening and then strengthening the Polish currency. Polish producer prices figures released on Friday revealed a worse-than-expected rise in the annual rate by 3.7% in May, down from April’s revised 4.8% rise. This prompted a weakening in the zloty, however industrial output figures released the same day gave it a boost after they revealed a slowing in the pace of decline in the sector. Industrial output in May fell by an annual rate of 5.2%, which is slower than a revised 12.2% year-on-year decline in April, according to figures released by the Polish government. The zloty’s rally was further aided yesterday following a positive inflation figure, excluding food and energy prices, which showed a rise to 2.8% on the year in May from 2.6% in April. This figure was slightly above the forecasted figure of 2.7%. Attention has now turned to tomorrow’s Polish interest rate decision, where most analysts are forecasting a rate cut to 3.50% following the fall in inflation.

Sterling falls vs. euro despite ECB's refi

The pound weakened by 0.44 cents (0.37%) against the euro yesterday to close the day at 1.1785.

• In early trading yesterday, sterling strengthened against the euro, hitting its highest level since December ahead of the European Central Bank’s first ever one-year refinancing operation tomorrow.
  
• This announcement overshadowed better-than-expected German IFO Business Climate figures out mid-morning.
  
• However, weak London equities eventually dragged the pound into negative territory. The FTSE 100 finished down 111.88 (2.57%), with British Airways taking a particular hit, falling as much as 8% at some points.
  
• In trading so far today, the pound has continued its decline against the single currency as investors again take their lead from broader market movements. There are no major announcements due in the UK or the eurozone today.

Sterling weakened after London equities fall

The pound weakened considerably against the US dollar yesterday, falling 1.47 cents (0.89%) to finish at $1.6345.

• In early trading yesterday, sterling weakened against the dollar as investor jitters before tomorrow’s US Fed policy meeting helped the US currency and curtailed demand for higher-risk currencies like the pound.
  
• A survey released by UK property website Rightmove show ed a 0.4% fall in house prices in June after four months of rises also weighed on the pound.
  
• With data thin in the UK this week, sterling will generally take its lead from broader market movements, particularly London equity markets. The FTSE 100 finished the day down 111.88 (2.57%) yesterday, pulling the pound down with it.
  
• In trading so far today, the pound has continued its slide against the greenback, as investors warily eye tomorrow’s US Fed interest rate meeting.
  
• There are no major announcements due in the UK today, whilst in the US Existing Home Sales are out at 15.00 BST.

Euro weakens ahead of important announcements

The euro weakened by 0.73 cents (0.52%) against the US dollar yesterday to finish the day at $1.3866.

• In early trading yesterday, the euro weakened against the dollar as investors became wary ahead of two important announcements by their respective central banks tomorrow. The European Central Bank is set to announce its first ever one-year refinancing operation, whilst the US Fed is due to give its latest monetary policy and interest rate decision. Speculation surrounding these announcements bolstered demand for the safe-haven of the greenback.
  
• The single currency fell despite better-than-forecast German IFO Business Climate data out mid-morning. The index rose this month to 85.9 from 84.2, ahead of analysts’ forecasts of 85.1.
  
• In trading so far today, the euro has resumed its slide against the dollar as investors continue to eye tomorrow’s announcements warily.
  
• There are no major economic releases due in the eurozone today, whilst in the US Existing Home Sales are out at 15.00 BST.

Aussie weakens after SMH piece predicts rate cut

The aussie weakened for the second day running against the pound yesterday after an opinion piece in the Sydney Morning Herald argued the next Australian interest rate move will be down.

• In addition, a prediction by the World Bank that the global recession will be much deeper than previously expected also hit higher-risk currencies like the aussie.
  
• Sterling strengthened despite a fall on London equity markets yesterday, which finished down over 2.5%.

Sterling strengthens vs. kiwi despite FTSE falls

Sterling strengthened against the kiwi yesterday after concern surfaced that the RBNZ would be slow to raise interest rates after the World Bank said the recession will be deeper than expected.

• The pound strengthened against the kiwi yesterday despite falls on London equity markets.
  
• Nevertheless, the Washington-based World Bank’s prediction that the world economy would contract 2.9% in 2009, rather than the 1.7% decline previously forecasted, weighed on higher-risk currencies like the kiwi, to the benefit of sterling.

The pound finishes up against the euro

The pound strengthened by 0.84 cents (0.72%) against the euro on Friday, closing the day at 1.1829.

• In early trading on Friday sterling strengthened against the euro, as the lack of economic data prompted traders to take their lead from equity markets. The FTSE 100 eventually finished the day up 65.07 (1.52%).
  
• It also allowed investors to reconsider a week of less positive data for the pound, and therefore reassess whether the UK economy really is on the road to recovery. Poor retail sales and unemployment data earlier in the week had hit sterling, however sentiment improved on Friday.
  
• In addition, a warning from the European Central Bank that banks in the region might face another $283 billion of losses by the end of next year reduced appetite for the single currency.
  
• In trading so far today the pound has continued its rise against the euro, after comments over the weekend from Jean-Claude Trichet, President of the ECB, who said there would be no more stimulus packages in the region. ‘In our analysis, this is sufficient,’ he said.
  
• There are no major announcements due in the UK today.

Sterling rises over 1.5 cents vs. US Dollar on Friday

Sterling rose sharply against the US dollar on Friday, finishing up 1.63 cents (1%) at $1.6492.

• In early trading on Friday sterling gained against the dollar, as rising share prices stoked some demand for higher-risk currencies like the pound. The FTSE 100 eventually closed up 1.52%.
  
• The dearth of economic data on both sides of the Atlantic also encouraged investors to re-examine optimism that the UK economy may soon recover, a view that was fuelled by more positive data two weeks ago. But poor retail sales data in particular, in addition to speeches by Chancellor Alistair Darling and BoE Governor Mervyn King urging caution about improvements in the economy, weighed on the pound last week. However, sentiment improved on Friday.
  
• In trading so far today the pound has dipped against the greenback, after a report released by the Centre for Economics and Business Research said roughly 334,000 jobs would be lost across the business service sectors in the next three years.
  
• There are no major announcements due in the UK or US today.

Euro dips against dollar

The euro dipped by 0.41 cents (0.29%) against the US dollar yesterday to finish the day at $1.3939.

• In early trading on Friday the euro strengthened against the dollar, as more upbeat US data and gains in European equities boosted hopes that a global economic recovery was on course.
  
• The euro’s gains were limited, however, as investors were wary of taking on large positions ahead of the US Fed’s policy meeting later this week and issuance of another record batch of US government debt.
  
• In trading so far today the single currency has weakened sharply against the dollar, after news over the weekend that President of the European Central Bank, Jean-Claude Trichet, had no intention of extending the ‘completely extraordinary’ stimulus packages already unveiled by the bank.

Aussie weakens despite Asian stock gains

The aussie slipped against the pound on Friday, despite rises in Asian stocks spurring demand for higher-yielding assets.

• On a good day for the pound against a basket of currencies, the aussie slipped against the pound on Friday as improved sentiment about the UK economy swept the market.
  
• Earlier in the week, poor UK retail sales and unemployment data had hit sterling, however gains on London equity markets helped the pound gain ground on Friday.
  
• There are no major announcements due in the UK or Australia today so traders are likely to take their lead from broader market movements.

Sterling strengthens vs. kiwi on FTSE gains

The pound strengthened against the kiwi on Friday, despite investors being drawn to the South Pacific nation’s assets because of its 2.5% interest rate.

• The kiwi weakened against sterling on Friday as a 1.52% rise on the FTSE 100 buoyed hope that the UK economy was close to a recovery. Poor data earlier in the week had hit the pound.
  
• There are no major announcements due in the UK or New Zealand today so traders are likely to take their direction from broader market movements.

Sterling dips against euro after weak figures

Sterling weakened by 0.16 cents (0.14%) against the euro yesterday to close the day at 1.1745.

• In early trading yesterday sterling hit a one-week low against the euro, after data showed UK retail sales unexpectedly fell in May, down 0.6% from the previous month. Overall, that left retail sales 1.6% lower than the same month a year ago.
  
• The pound also fell yesterday after separate figures showed Britain’s public finances deteriorated more than expected last month, with public sector net borrowing rising to a record high of nearly £20 billion.
  
• In trading so far today the pound has dipped slightly against the euro as investors continue to assess recent less positive announcements.
  
• There are no major announcements due in the eurozone or UK today.

Cable down after UK retail sales data

Sterling weakened by 0.68 cents (0.41%) against the US dollar yesterday, finishing the day at $1.6329.

• In early trading yesterday the pound initially rose on the back of improved risk appetite, before nose-diving because of disappointing UK retail sales figures. Sales fell 0.6% in May, well down on analysts’ forecasts of a 0.4% gain. That left them 1.6% lower than in the same month a year ago.
  
• Meanwhile, a Bank of England report showing that lending to British businesses fell by its biggest amount in nearly nine years in April increased selling pressure on sterling. Investors took this news as a sign the recession was far from over despite some positive data recently, with UK companies still finding it difficult to attain credit.
  
• In trading so far today the pound has made limited gains against the greenback as investors consider recent developments.
  
• There are no major announcements out in the UK or US today.

Euro dips against US dollar yesterday

The euro dipped by 0.41 cents (0.29%) against the US dollar yesterday to finish the day at $1.3898.

• In early trading yesterday, the dollar fell against the single currency after the latest Philadelphia Fed survey came in above expectations and much less negative than the month before. The index of business conditions in the US Mid-Atlantic region was -2.2 this month, well ahead of last month’s -22.6, prompting increased demand for riskier currencies like the euro as investors speculated that the world’s largest economy could be on the cusp of recovery.
  
• However, US Unemployment Claims figures released mid-afternoon stifled this optimism as they came in worse than the month before, prompting investors to head back to the safe-haven of the greenback. Jobless claims stood at 608k in May.
  
• In trading so far today, the euro has risen against the dollar as traders consider the economic releases out so far this week.
  
• There are no major announcements due in the eurozone or US today.

Aussie makes solid gains vs. sterling

The Australian dollar made solid gains against sterling yesterday, as doubts arose over the UK's economic recovery.

• UK retail sales data surprised markets by falling 0.6 percent in May, against a forecast gain of 0.4 percent.
  
• Other news also showed that Britain’s public finances deteriorated more than expected last month, while lending to British businesses fell by the largest amount in 9 years.
  
• This data has illustrated that there is still a large gap between recent investor optimism and economic fundamentals.
  
• This suggests that any economic recovery is going to be fragile and likely to be stuttering, with economic confidence and optimism likely to continue to ebb and flow on either positive or negative data.

Kiwi takes advantage of weak pound

The New Zealand dollar remained within recent ranges against the aussie yesterday, but managed to gain some ground on a weakening pound.

• The kiwi remained relatively steady as markets continue to remain cautious over higher yielding currencies, given uncertainty over the global economic recovery.
  
• With no local data due investor are likely to turn their focus to next week’s first-quarter current account and growth data.

Sterling weakens sharply vs. euro despite jobless figs

Sterling weakened by 0.97 cents (0.82%) against the euro yesterday to close the day at 1.1761.

• In early trading yesterday sterling fell by over a cent against the euro, despite better-than-expected UK Claimant Count figures out mid-morning. Those claiming unemployment benefits rose by 39,300 last month, much less than the 60,000 increase analysts had been expecting.
  
• Instead, sterling weakened on the back of the latest Bank of England minutes, which revealed policymakers felt there was no reason to change their medium-term outlook on the economy and inflation despite more encouraging data out recently. The bank voted unanimously to keep interest rates on hold and not extend their quantitative easing program.
  
• Falling UK equity markets provided little respite for the falling pound yesterday. The FTSE 100 eventually finished the day down 50.11 points (1.16%).
  
• In trading so far today the pound has continued its slide against the euro, despite UK Chancellor Alistair Darling’s announcement last night that the recession was easing.
  
• There are no major announcements due in the eurozone today, whilst in the UK Retail Sales (MoM) are out at 09.30 BST.

Sterling weakens as BoE minutes weigh

The pound weakened slightly against the US dollar yesterday, falling by 0.13 cents (0.08%) to finish the day at $1.6397.

• In early trading yesterday sterling weakened against the dollar, after minutes from the Bank of England’s latest meeting revealed no alteration in their medium-term economic outlook. This news was taken negatively by the market following some more positive data out in the past few weeks.
  
• However, the pound’s losses were capped after some better-than-expected UK employment data, which revealed an easing in the rate of unemployment. The number of people claiming jobless benefits rose by 39,300 last month, below the 60,000 increase expected.
  
• Sterling ’s falls also came despite weaker-than-forecast inflation data out in America. US CPI rose just 0.1% in May, dragging the annual inflation rate down to its lowest level since 1950. This fuelled speculation that the US Fed will rule out an interest rate rise in the medium-term at their meeting next week.
  
• In trading so far today the market remains relatively unchanged, as investors continue to digest President Obama’s financial regulation plans announced last night.
  
• In the UK, Retail Sales (MoM) are due at 09.30 BST today, whilst in the US Unemployment Claims are out at 13.30 BST.

Euro finishes up over a cent vs. US Dollar

The euro strengthened by 1.05 cents (0.76%) against the US dollar yesterday to close the day at $1.3939.

• In early trading yesterday the euro edged up against the dollar as the single currency tracked a recovery in crude oil prices. However, an initial 0.5% dip in European equities capped its gains.
  
• The dollar again slid on renewed speculation its position as the world’s premier reserve currency could be under threat. A summit involving the leaders of the emerging BRIC nations has forced the issue onto the currency agenda, particularly after Russia last week said it would cut the amount of US Treasuries it held.
  
• Disappointing US consumer price index figures, which showed a rise of just 0.1% in May, kept up the downward pressure on the greenback, as it made a US interest rate rise even more unlikely this year.
  
• So far today the euro has edged slightly higher against the dollar, while investors continue to pore over President Obama’s new regulation plans detailed last night.
  
• There are no major announcements due in the eurozone today, whilst in the US Unemployment Claims are out at 13.30 BST.

Aussie gains on profit-taking

The Australian dollar made some gains against sterling yesterday, after investors began to take profits on the pound’s recent sharp gains.

• The pound’s fall came despite a much smaller than expected rise in the UK claimant count for unemployment, which should have added weight to optimism about a British economic recovery.
  
• But investors instead focused on the Bank of England minutes, which expressed caution over the UK’s economic outlook.
  
• Further clues on the health of the UK economy will be eyed today, with the release of a raft of data including Retail Sales.

Pound falls against kiwi

The New Zealand dollar made gains against the pound yesterday, despite falling equity markets and investors remaining cautious about taking on added risk.

• The kiwi’s rise against sterling was due to investors taking profits on the pound’s recent gains.
  
• Markets still remain uncertain over the global economic outlook, which reflects the currency movement having no clear direction.
  
• The kiwi was little moved by comments from Reserve Bank of New Zealand Governor, Alan Bollard, who reiterated that the economy was likely to start growing again by the end of the year but the recovery would remain fragile.

Sterling rises vs. euro on inflation figure

Sterling strengthened against the euro by 0.35 cents (0.30%) yesterday to close the day at 1.1858.

• In early trading yesterday sterling rose against the single currency, after data released in the UK showed inflation fell less than forecast in May. Yesterday’s UK CPI reading of 2.2% was slightly down on the 2.3% registered in April, but still comfortably above the Bank of England’s target of 2% inflation. Deflation now looks increasingly unlikely.
  
• However, sterling’s gains were capped to some extent following the release of better-than-expected German ZEW Economic Sentiment survey. This month’s reading of 44.8 was well ahead of the 35.0 predicted, bolstering investor hopes of eurozone recovery.
  
• In trading so far today the pound has pared some of the gains it made yesterday, as investors look ahead to important UK employment data out later today.
  
• There are no major announcements due in the eurozone today, whilst in the UK Claimant Count Change data and MPC Minutes are out at 09.30 BST.

US Dollar falls on Medvedev comments

Sterling rose by 0.91 cents (0.56%) against the US dollar yesterday, finishing the day at $1.6410.

• In early trading yesterday sterling strengthened against the dollar, after Russian President Dmitry Medvedev hinted that Moscow may be looking to reduce the share of US assets from its reserve currency portfolio.
  
• The pound’s gains were further extended following the release of UK inflation figures mid-morning. May’s reading of 2.2% was slightly down on April’s reading of 2.3% but not as low as the 1.9% analysts had been forecasting.
  
• In trading so far today the pound has continued its rise against the greenback as the leaders of Brazil, Russia, India and China continued their first summit, pushing the sustainability of the dollar’s reserve status to the top of the currency market’s agenda once again.
  
• In the UK, Claimant Count Change data and MPC Minutes are due at 09.30 BST, whilst in the US Core CPI (MoM) is out at 13.30 BST. US Fed Chairman Ben Bernanke is also due to speak at 17.00 BST.

Euro finishes up against US Dollar

The euro strengthened by 0.32 cents (0.23%) against the US dollar yesterday to close the day at $1.3834.

• In early trading yesterday, the euro strengthened against the dollar after a surprising rise in the German ZEW Economic Sentiment bolstered hopes for the eurozone’s chances of economic recovery. This month’s reading of 44.8 was well ahead of the 35.0 expected.
  
• The downward pressure on the dollar was further increased yesterday after the news that Russia may be looking to diversify its reserve currency portfolio away from the greenback prompted traders to sell the US currency.
  
• In trading so far today the euro has resumed its rise against the dollar, as the first summit of the fast-growing “BRIC” nations continues. The meeting has once again thrust the dollar’s status as the world’s premier reserve currency onto the agenda.
  
• There are no major announcements due in the eurozone today, whilst in the US Core CPI (MoM) is out at 13.30 BST and Fed Chairman Ben Bernanke is to speak at 17.00 BST.

Aussie falls to 7-week low against sterling

The Australian dollar fell to near 7 week lows against sterling yesterday, as the aussie was hit by further falls in commodity prices.

• Australia is one of the world's leading commodity exporters so falls in prices will generally put pressure on the aussie.
  
• The local currency also gained little support from the RBA's minutes, which stated there was no pressing need for the central bank to cut rates further.
  
• However, analysts remain concerned that the ongoing pressure on funding costs would put upward pressure on mortgage rates. This was verified by the country’s leading mortgage lender raising its variable mortgage rate. This has increased speculation that the central bank may have to cut rates further.
  
• Sterling also received a boost yesterday from firmer than expected inflation data, which showed CPI prices fall to 2.2% in May. Analysts had expected a bigger fall and it helped increase speculation that the chances of deflation were now quite low.

Kiwi holds vs. aussie, down against sterling

The New Zealand dollar had a mixed day yesterday, holding steady against the aussie but losing ground to a stronger pound.

• Investors continue to take a guarded view over the potential economic recovery, with a mixture of weak and upbeat economic news clouding the issue.
  
• The kiwi weakened considerably against sterling yesterday, with the pound being supported by the view that the UK economy may be slowly recovering.

Sterling gains against Polish zloty yesterday

Sterling has strengthened against the Polish zloty over the last week despite last month’s inflation figure coming in better-than-expected at 3.6%, down from 4% in April and below analyst’s predictions of 3.8%. This bolstered hopes of a Polish interest rate cut this month, following holds in April and May because of higher inflation and a weaker zloty. Yesterday, the Polish government approved a cautious 2010 budget outline which forecasted GDP growth of 0.5% and average annual inflation of 1%. Poland has suffered a sharp economic slowdown since Christmas, with GDP growth expected to reach just 0.2% this year, down sharply from 4.9% in 2008 but still better than most others in recession-ravaged eastern Europe. The 2010 Polish budget outline also envisaged unemployment to reach 13.8% by end-2010, up from around 11 percent now. All these factors combined, and the resulting speculation over how much money the Polish government will have to borrow next year, weighed on the zloty yesterday. Crucially, the centre-right government has not yet set the level of its 2010 budget deficit, which may prove critical for both Poland's eurozone entry ambitions and for the zloty and bond prices. In terms of the UK, improved sentiment surrounding its economy, prompted by more positive UK housing and industrial production data, has seen sterling gain against a basket of currencies recently, of which the Polish zloty is one.

Sterling closes at year-high against euro

Sterling hit a year-high against the euro yesterday, rising 0.94 cents (0.80%) to close the day at 1.1823.

• In early trading yesterday, sterling continued its rally against the single currency after weak eurozone employment figures prompted investors to question the health of the region’s economy. The region lost 1.22 million jobs during the first three months of 2009.
  
• An upbeat report released by the Confederation of British Industry also bolstered demand for the pound yesterday, after it predicted the UK economy would stabilise in the fourth quarter of the year, earlier than previous estimates, and that growth would return in early 2010.
  
• In trading so far today, sterling has pared some of yesterday’s gains as investors eye important data out later today.
  
• In the UK, CPI inflation figures are out at 09.30 BST today, whilst in the eurozone, German ZEW Economic Sentiment data and inflation figures are due at 10.00 BST.

Sterling falls over a cent against US Dollar

Sterling weakened by 1.22 cents (0.74%) against the US dollar yesterday, finishing the day at $1.6319.

• In early trading yesterday, sterling fell against the greenback after Russia’s finance minister expressed confidence in the US currency. Speaking at the G8 meeting over the weekend, Alexei Kudrin said the dollar’s role as the world’s primary reserve currency is safe for now.
  
• However, the greenback’s gains were cap ped to some extent after a report by the CBI further improved confidence in the UK economy. It forecasted a return to growth at the start of 2010.
  
• Nevertheless a fall on UK equities kept up the downward pressure on sterling in late trading. The FTSE 100 eventually finished the day down 115.94 points (2.61%).
  
• In trading so far today, the pound has risen slightly against the dollar as investors consider recent data.
  
• In the UK, CPI data is out at 09.30 BST today, whilst in the US Building Permits data is due at 13.30 BST.

Euro down over 2 cents vs. USD

The euro weakened considerably against the US dollar yesterday, dropping 2.12 cents (1.51%) to finish at $1.3802.

• In early trading yesterday, the euro weakened by over a cent against the dollar after Russia’s finance minister reaffirmed the greenback’s status as the world’s premier reserve currency. Russia holds roughly 30% of its $404.2 billion foreign exchange reserves in US Treasuries, making it the fifth-largest holder of US government debt.
  
• Also contributing to the downward pressure on the single currency yesterday were first-quarter eurozone employment figures, which revealed a 1.22 million job loss over the period.
  
• So far today, the euro has pared some of the losses it made yesterday as investors continue to digest recent economic announcements.
  
• In the eurozone, German ZEW Economic Sentiment data and inflation figures are out at 10.00 BST today, whilst in the US Building Permits data is due at 13.30 BST.

Sterling hits two-week high vs. aussie

The Australian dollar reached two-week lows against sterling yesterday after equity markets and commodity prices fell.

• The high yielding and commodity based aussie was one of the hardest hit as investors again became risk averse.
  
• However, confidence in an imminent UK recovery still remains shaky, particularly after IMF chief Dominique Strauss-Kahn stated that although there were signs that the world economy may be slowly crawling out of recession, the worst of the economic crisis was still not over.
  
• Today investors will eye key UK inflation data for further direction.

Kiwi down against sterling as risk appetite eases

The New Zealand dollar dropped against sterling yesterday as falling equities markets hit demand for higher-yielding currencies.

• The Kiwi was also hurt by manufacturing data which suggested that the local economy in the first-quarter is likely to have again contracted sharply.
  
• However, the Kiwi’s losses were contained by last week’s central bank decision to keep interest rates on hold.
  
• The Kiwi's direction in the next few days is likely to be guided by broader market movements.

Sterling finishes Friday slightly down against euro

Sterling weakened slightly against the euro on Friday, dropping 0.27 cents (0.23%) to close the week at 1.1729.

• In early trading on Friday, sterling fell against the single currency as traders booked profits from its recent rally. The prospect of G8 finance ministers meeting over the weekend meant investors were particularly keen to square off positions before then.
  
• The downward pressure on sterling was also aided following dovish comments from incoming Bank of England policy-maker Paul Fisher, who said the UK should be wary of complacency and that economic output was likely to fall in the second quarter.
  
• In trading so far today, the pound has strengthened against the euro as investor confidence about the UK economy’s recovery remains high.
  
• There are no major announcements due in the UK or eurozone today.

Sterling falls heavily after recent rally vs. US dollar

The pound fell by 1.48 cents (0.89%) against the US dollar on Friday, finishing the day at $1.6441.

• In early trading on Friday, sterling weakened considerably against the dollar as traders booked profits ahead of the G8 meeting over the weekend.
  
• Cautionary comments from UK Chancellor Alistair Darling also contributed to sterling’s fall mid-afternoon, after he warned that rising oil prices had the potential to be a “huge problem” for any recovery.
  
• So far today, the pound has resumed its slide against the greenback as investors eye important data out later this week.
  
• There are no major announcements due in the UK today, whilst in the US TIC Long-Term Purchases data is out at 14.00 BST.

Euro falls against US dollar as US Treasuries deemed safe

The euro weakened by 0.94 cents on Friday against the US dollar to finish the day at $1.4014.

• In early trading on Friday, the euro dipped against the dollar after a drop in eurozone industrial output reminded investors the region’s economy still had some way to go before it comes out of recession. It dropped 21.6% in April from a year ago, a record fall and well below the 20.2% dip expected.
  
• Concern earlier in the week that international reserve managers were set to diversify away from the US dollar also eased on Friday, aiding the greenback’s recovery. Comments from Kaoru Yosano, Japan’s finance minister, that his trust in US Treasuries was “absolutely unshakeable” rekindled demand for the US currency.
  
• In trading so far today, the euro has fallen sharply against the dollar as traders continue to book profits following gains in recent days.
  
• There are no major announcements out in the eurozone today, whilst in the US TIC Long-Term Purchases data is due at 14.00 BST.

Aussie strengthens initially after G8 meeting

The Australian dollar strengthened against sterling overnight as the outcome of this weekend’s G8 meeting held no surprises in terms of currency.

• Although there is still some support for investors taking on more risk, market optimism still remains guarded.
  
• So despite some signs that the UK economy may be starting to bottom out, investors will likely remain cautious until there are signs of economic growth, rather than diminishing contractions.
  
• No significant data is due out of Australia or the UK today so direction is likely to come from broader market movements.

Kiwi consolidates on recent gains

The New Zealand dollar consolidated on recent gains against sterling on Friday as demand for high yielding currencies took a breather.

• The RBNZ's decision last week to leave rates on hold sparked debate that the bank has effectively ended its easing cycle, despite it leaving the door open for further rate cuts.
  
• Investors are now starting to price in the potential for rate increase next year.
  
• The Kiwi was little moved by Retail sales data on Friday which revealed a bigger than expected rise in April. This was largely driven by car sales.

Sterling breaks through 1.17 level vs. EUR

The pound continued its rise against the euro yesterday, strengthening 0.6 cents (0.51%) to close the day at 1.1756.

• In early trading yesterday, sterling hit a year-high against the euro after a Bank of England/GfK NOP poll showed rising UK inflation expectations. Its rally was also aided by a NIESR report which showed the British economy grew 0.2% on the month in April and 0.1% in May.
  
• These announcements added to a string of fairly firm UK figures out over the past few days, which continued to boost the pound. In particular, better-than-expected industrial production data released on Wednesday lifted investor appetite for sterling.
  
• Finally, strong gains on London equity markets also contributed to sterling’s advances in late trading. The FTSE 100 eventually finished up 25.12 points (0.57%).
  
• So far today, the pound has dipped slightly against the euro as investors continue to digest the data released this week.
  
• There are no major announcements due in the UK or eurozone today.

Sterling closes at a six-month high against US Dollar

Sterling rose sharply against the US dollar yesterday to close at a six-month high. It finished at 1.6589, up 2.33 cents (1.42%) on the day.

• In early trading yesterday, sterling resumed its rise against the greenback as risk appetite continued to improve following solid gains on stocks and oil prices. The FTSE 100 eventually finished the day up 25.12 points (0.57%).
  
• Two polls showing rising UK inflation expectations and possible economic growth in April also aided the pound’s gains mid-morning. These surveys were just the latest in a string of more positive data out recently which have bolstered the view that the UK economy may be recovering.
  
• In trading so far today, sterling has pared some of the gains it made yesterday as investors continue to assess the data out this week.
  
• There are no major announcements due in the US or UK today.

Euro strongly over $1.41 vs. USD

The euro strengthened by 1.3 cents (0.93%) against the US dollar yesterday to finish the day at $1.4108.

• In early trading yesterday, the single currency strengthened against the dollar as investors looked more favourably upon higher-yielding currencies like the euro. Increasingly positive economic data recently has prompted investors to look beyond the perceived safe-haven of the greenback.
  
• Adding to the euro’s gains was the news a G8 source had told Reuters that the IMF had raised its 2010 global growth forecasts to 2.4% from April’s estimate of 1.9%. This bolstered demand for perceived riskier currencies like the euro.
  
• In trading so far today, the euro has dipped against the dollar as investors eye this weekend’s G8 meeting in Italy with interest.
  
• There are no major announcements due in the UK or eurozone today.

Aussie strengthens against pound on US data

The Australian dollar strengthened against the pound yesterday, after positive economic data was released in the US.

• The US data fuelled speculation that the economic deterioration in the world economy may be coming to an end. The news saw demand for risk appetite rise with commodity linked currencies, such as the Aussie, benefitting the most.
  
• Direction today will be largely driven by broader economic sentiment.

Kiwi shoots up on rate hold

The Kiwi strengthened by just under four cents against sterling yesterday, following the Reserve Bank of New Zealand’s decision to keep interest rates on hold this week at 2.5%.

• Much like the Aussie, the Kiwi benefitted from positive US data being released.
  
• The New Zealand dollar has also benefitted from better-than-expected retail sales data being released overnight.

Sterling hits year high against EUR

Sterling strengthened against the euro by 1.05 cents (0.91%) yesterday to close the day at a six-month high of 1.1696.

• In early trading yesterday the pound rose against the single currency as gains on London equities buoyed investor confidence in the UK’s economy. The FTSE 100 was up 1.6% in early trade.
  
• A greater-than-expected fall in French industrial output in April did little to ease the euro’s plight mid-morning, as it revealed a contraction of 1.4%, over the 0.2% predicted.
  
• Further aiding sterling’s gains were stronger-than-forecast UK manufacturing figures, which revealed 0.2% growth in the sector last month, versus the 0.1% contraction expected. Industrial production was also up 0.3% this month.
  
• In trading so far today the pound has resumed its rally against the single currency, breaking through the 1.17 level as investors continue to digest recent data releases.
  
• There are no major announcements due in the UK or eurozone today.

Sterling continues its rally vs. USD

Sterling continued its recent rally against the US dollar yesterday, rising by 0.51 cents (0.31%) to finish the day at $1.6356.

• In early trading yesterday the dollar fell against sterling, as global stock prices were lifted by improved risk appetite in the global economy. The greenback struggled as the market reassessed the chances of a US interest rate rise at the end of this year, following positive jobs data released last Friday.
  
• Sterling ’s rally was also helped by surprisingly positive UK manufacturing figures, which revealed a 0.2% growth in the sector last month. Industrial production rose 0.3% over the same period.
  
• However, a fall in the US Trade Balance to -$29.2 billion capped sterling’s gains to some extent as investors questioned the health of the world’s largest economy.
  
• However, the news that Russia’s central bank wants to cut the amount of currency reserves it holds in US Treasuries and buy IMF-issued bonds instead maintained the general downward pressure on the dollar mid-afternoon. It is currently the fifth largest holder of US government debt, with roughly $404.2 billion foreign exchange reserves in Treasuries.
  
• In trading so far today, the pound has continued its rise against the greenback as improved risk appetite sweeps the market.
  
• There are no major announcements due in the UK today, whilst in the US Retail Sales data is due at 13.30 BST.

Euro weakens after automatic sell off orders kick in

The euro weakened 0.86 cents (0.61%) against the US dollar yesterday to close the day at $1.3978.

• In early trading yesterday the dollar dipped against the single currency, as the market questioned how likely a US interest rate cut is later this year. Following better-than-expected American jobs data on Friday speculation grew earlier this week that a cut may be on the cards, but investors began to question its likelihood yesterday.
  
• However, worse-than-expected US Trade Balance figures trimmed the euro’s gains in the early afternoon, after they revealed a fall to -$29.2 billion this month.
  
• News that Russia’s central bank, the fifth largest holder of US government debt, wants to cut the amount of currency reserves it holds in US Treasuries and buy IMF-issued bonds instead initially boosted the euro. However, as it rose it triggered automatic sell orders, which pushed the single currency down 0.3% in late trading.
  
• In trading so far today the euro has headed back over $1.40, as investors continue to pour over recent economic data.
  
• There are no major announcements due in the eurozone today, whilst in the US Retail Sales data is out at 13.30 BST.

Aussie weakens on improved UK sentiment

The Australian dollar weakened slightly against sterling yesterday.

• The aussie’s losses against the pound came despite BoE policymaker, Kate Barker, suggesting that British interest rates were likely to remain low for an extended period of time.
  
• Sterling was boosted by industrial output figures yesterday, which rose unexpectedly in April.
  
• The rise was the first in over 12 months and provided further evidence that the UK economy could return to positive growth within the second or third quarter of this year.

Kiwi's rate hold helps NZD

The New Zealand dollar gained sharply against the aussie and sterling yesterday, as the Reserve Bank surprised some investors by keeping interest rates on hold at 2.5 percent.

• The pause in rates was the first since July of last year, and was designed to stimulate the economy which has been in recession since last year.
  
• However, no growth is expected until the end of 2009, so the RBNZ did leave the door open for further cuts after it has assessed the impact of its previous aggressive rate cutting.

Euro finishes down against sterling

The pound strengthened against the euro by 0.46 cents (0.40%) yesterday to close the day at 1.1591.

• In early trading yesterday sterling strengthened against the euro, following further evidence the UK’s housing market was stabilising. House prices in England and Wales fell at their slowest annual rate since November 2007 according to RICS, echoing other recent surveys suggesting house prices may be bottoming out.
  
• News that Prime Minister Gordon Brown would not be ousted by Labour parliamentarians anytime soon also bolstered the pound after heavy losses at the end of last week.
  
• So far today the pound has resumed its rise against the single currency, testing the six-month highs it reached last week.
  
• There are no major announcements due in the eurozone today, whilst in the UK Manufacturing Production figures are out at 09.30 BST.

Sterling rallies over 2.5 cents against US dollar

Sterling strengthened considerably against the US dollar yesterday, rising 2.54 cents (1.58%) to finish at $1.6305.

• In early trading yesterday the pound recovered from heavy losses endured over the past few days, after a survey released by RICS showed that UK house prices may be bottoming out.
  
• The news that the Prime Minister was safe in his job for the time being following a meeting with Labour MPs last night also calmed selling pressure on sterling yesterday, adding to its early gains.
  
• Sterling continued its rally yesterday afternoon on the back of US and European stock market rises, buoyed by an announcement by the US Treasury that 10 of the country’s biggest banks could repay a combined $68 billion of taxpayer money received during the height of the credit crunch.
  
• In trading so far today the pound has resumed its rally against the greenback, as improved risk appetite continues.
  
• In the UK, Manufacturing Production figures are out at 09.30 BST, whilst in the US Trade Balance data is out at 13.30 BST.

Euro finishes over $1.406 against US Dollar

The euro strengthened by 1.65 cents (1.19%) against the US dollar yesterday, closing the day at $1.4064.

• In early trading yesterday the euro gained against the dollar, as investors questioned whether there was a strong possibility of a US interest rate rise later this year to justify pushing the currency higher.
  
• The single currency’s gains continued yesterday afternoon after rises on European and US equity markets bolstered appetite for riskier currencies. The news that 10 of the US’s biggest banks could repay some of the money they received in government bailouts drove this rally. In addition, news that Latvia, one of the most troubled economies in Eastern Europe, could yet avoid devaluing its currency helped the euro.
  
• So far today the euro has risen slightly against the dollar, as the market looks for clues about the chance of a US interest rate rise by the end of the year.
  
• There are no major announcements out in the eurozone today, whilst in the US Trade Balance figures are due at 13.30 BST.

Political calm helps sterling vs. aussie

The Australian dollar lost ground against sterling yesterday, following further evidence that the UK housing market is starting to stabilise.

• The RICS survey revealed that UK house prices had fallen at their slowest rate since November 2007. Added to other recent housing data, there is now a strong argument that housing prices may be bottoming out.
  
• The pound also was boosted by Labour MPs supporting embattled Prime Minister, Gordon Brown, helping calm British political waters.
  
• Today a number of industrial and manufacturing figures are due from the UK, which will be eyed closely for any potential improvement. Any data that suggests no further quantitative easing will be required by the Bank of England will be taken as a positive.

Kiwi losses further ground against sterling & aussie

The New Zealand dollar lost further ground against both sterling and the aussie yesterday.

• Demand for the kiwi was undermined as lower risk appetite and uncertainty over the Reserve Bank of New Zealand’s interest rate decision later in the week continued to weigh.
  
• Investor have reduced their position in the New Zealand dollar leading up to the RBNZ decision this evening, with markets generally split over whether the bank will cut rates or leave them on hold.

Polish zloty finishes down vs. GBP last week, pars gains this week

The pound weakened against the Polish zloty last week as concerns over the UK’s political situation intensified. The prospect of disastrous results for Labour in the European and local elections prompted six ministerial resignations from Prime Minister Gordon Brown’s cabinet as he struggled to hold onto the party leadership. The local currency rarely benefits from political uncertainty, so disunity in the Labour Party weighed heavily on the pound late last week. The zloty’s gains were also extended after the Polish government announced its intention to lower the country's budget deficit once its economy starts to recover from a slowdown in growth. Poland's Prime Minister Donald Tusk announced last Thursday that he wants to avoid increasing taxes when reviewing the budget plan for 2009, saying he "doesn't expect the increased budget deficit will be too drastic. These are things we would like to avoid." This provided a welcome boost for investor looking at Polish assets and they responded by buying into the zloty. However, so far this week, the pound has recouped some of the losses it endured as the UK’s political situation looks to have stabilised. Strong gains on London equity markets recently have also improved investor sentiment in the UK’s chances of recovery.

Sterling continues rise against euro

The pound strengthened 1.08 cents (0.94%) against the euro yesterday to close the day at 1.1545.

• In early trading yesterday, sterling strengthened against the euro following the news that Standard & Poor’s had downgraded Ireland’s credit rating for the second time in less than three months. The ratings agency cited the fiscal costs to the government of supporting the Irish banking system as the reason for downgrading the country’s rating from AA+ to AA.
  
• Sterling strengthened yesterday despite the results of the European election, which piled further pressure on Prime Minister Gordon Brown after Labour endured a humiliating defeat.
  
• In trading so far today, sterling has strengthened against the euro following the news that Gordon Brown’s leadership will not be imminently challenged. He met with the Parliamentary Labour Party last night and appears to have diffused his critics, for now.
  
• There are no major announcements due in the UK today, whilst in the eurozone, German industrial production figures are out at 11.00 BST.

Sterling finishes up against the US dollar despite early losses

Sterling rose against the US dollar by 0.73 cents (0.46%) yesterday, finishing at $1.6051.

• In early trading yesterday, the pound fell by over 1.5 cents against the greenback after European election results revealed crumbling support for the Labour Party. The resulting pressure on Prime Minister Gordon Brown hit sterling hard, with the markets uncertain as to whether he will remain in office for much longer.
  
• However, the pound trimmed losses in late trading as some traders booked profits from selling in the pound over the past few days, which have sent it further away from the seven-month high it hit last week.
  
• In trading so far today, the pound has risen against the dollar after the news Gordon Brown will not be facing an imminent challenge for his leadership. The political uncertainty over the last week has weighed heavily on the pound so traders will be delighted the situation appears to be resolved.
  
• There are no major announcements due in the UK or US today.

Euro finishes down after Ireland's credit downgrade

The euro weakened by 0.68 cents (0.49%) against the US dollar yesterday to finish the day at $1.3899.

• In early trading yesterday, the euro weakened against the greenback after a leading ratings agency downgraded Ireland’s sovereign rating from AA+ to AA. Standard & Poor’s said it believed the Irish government’s ability to service its fiscal debts was the primary factor behind its decision.
  
• The dollar also benefitted from strong US employment data released on Friday, which came in well ahead of forecast, therefore fuelling speculation that the Fed may raise interest rates early next year.
  
• So far today, the euro has recouped some of the losses it made against the greenback yesterday as investors eye important German industrial production figures at 11.00 BST. There are no major announcements out in the US today.

Aussie down despite UK political turmoil

The Australian dollar lost ground against Sterling yesterday, despite a steep fall in support for the ruling Labour party in European elections causing widespread political instability.

• Doubts over the Labour government and the leadership of Prime Minister Gordon Brown have added to concerns over the UK economy.
  
• Traders however are willing to back Sterling on dips, as seen on Friday, and managed to claw back some ground on the Aussie which was hit by falls in demand for investor risk. Falls on Asian stock markets overnight did little to improve investor risk appetite.
  
• The continuing uncertainty over when the world economy will recover is likely to continue driving direction, with more sporadic data likely to result in the rate ebbing and flowing in the short to medium term.

Kiwi finishes down against sterling

The New Zealand dollar lost ground against Sterling yesterday after a further credit downgrade in Ireland and weaker equity markets saw a fall in demand for riskier currencies.

• Falls on Asian stock markets and a second downgrade of Ireland’s sovereign credit rating in three months reduced investor appetite for riskier currencies like the Kiwi.
  
• Investors remain cautious ahead of a number of key local releases later in the week. This starts with 1Q Terms of Trade later today and the RBNZ rate decision due on Wednesday.
  
• The RBNZ's decision may not provide very much support for the Kiwi with analysts split over whether they will cut rates this time round.

Political uncertainty caps sterling's gains against euro

The pound finished up 0.35 cents (0.31%) against the euro on Friday, closing the day at 1.1437.

• In early trading on Friday, the pound weakened against the euro as the UK’s political situation became increasingly fragile. The uncertainty surrounding Prime Minister Gordon Brown’s future and his cabinet reshuffle weighed on the pound early on.
  
• However, strong equity markets drove sterling higher on Friday afternoon. The FTSE 100 eventually finished the day up 51.62 (1.18%).
  
• In trading so far today, the pound has started well down against the euro as Prime Minister Gordon Brown faces renewed pressure to quit following disastrous European election results. The local currency rarely benefits from political uncertainty.
  
• There are no major announcements due in the UK or eurozone today.

US dollar claws back losses from pound's sharp rally

The pound weakened considerably against the US dollar on Friday, falling 1.96 cents (1.21%) to finish the day at $1.5978.

• In early trading on Friday, sterling weakened against the dollar as the uncertainty surrounding the UK’s political situation intensified.
  
• Better-than-expected US employment data further extended the pound’s falls on Friday afternoon, despite the overall jobless rate rising to 9.4%. Government data showed the US shed 345k jobs in May, well below the 540k expected by economists.
  
• In trading so far today, the pound has continued its slide against the greenback as speculation surrounding the future of Prime Minister Gordon Brown resurfaced. Last night, Labour endured a drubbing in the European elections after it attracted just 16% of the national vote.
  
• There are no major announcements due in the UK or US today.

US employment data benefits USD vs. EUR

The euro weakened by 2.15 cents (1.52%) against the US dollar on Friday, closing the day at $1.3967.

• In trading on Friday, the euro weakened against the dollar as official government employment data showed the US shed 345k jobs in May. This was much better than the 540k expected, although it did result in the unemployment rising to 9.4%.
  
• Economists said the fact that the greenback strengthened after the jobs data, rather than fall as risk aversion fell and investors abandoned the US currency in search of yield, meant the tide could be turning in its favour. There was also an element of profit-taking as traders capitalised on the euro’s sharp rally earlier in the week.
  
• In trading so far today, the euro has resumed its slide against the dollar as investors continue to digest last night’s European election results.
  
• There are no major announcements due in the US or eurozone today.

UK political uncertainty benefits aussie

The aussie strengthened against sterling on Friday as political uncertainty in the UK weighed on the pound.

• The uncertainty surrounding the UK’s political situation weighed on sterling on Friday, as Prime Minister Gordon Brown came under increasing pressure to resign following several ministerial resignations.
  
• A 0.9% gain in Australian shares on Friday also drove the aussie’s gains after rival miners Rio Tinto and BHP Billiton announced a new joint venture.

Kiwi finishes down vs. GBP

The kiwi dollar weakened slightly against sterling on Friday as the UK’s political turmoil capped its gains after strong rises on equity markets.

• Several high-profile resignations and the uncertainty surrounding Prime Minister Gordon Brown’s cabinet reshuffle weighed on sterling on Friday as speculation he may resign caused investor jitters.
  
• However, gains on European equity markets capped sterling’s losses late on, eventually finishing the day only slightly down.

Sterling hampered by political uncertainty

Growing concern over the UK’s political situation is taking its toll on the pound. Together with the inevitable check-back as traders book profits from its sharp rally over the last ten days, the resignation of several senior politicians this week has rocked investor confidence. The latest, work and pensions secretary James Purnell, who quit last night, is the first to openly call for Prime Minister Gordon Brown to stand aside. The results from yesterday’s local and European elections are expected to be very poor from Labour’s point of view. If they are, this will only exacerbate the situation. Political uncertainty is rarely good for the local currency as it almost always gives investors jitters about investing in the UK before the situation is resolved.

Political problems hamper pound against euro

The pound fell by 1.16 cents (1.01%) against the euro yesterday, finishing the day at 1.1402.

• In early trading yesterday sterling rose against the euro, after a report released by Halifax showed a 2.6% rise in UK house prices last month. In addition, the Bank of England’s decision to keep interest rates on hold and not extend their quantitative easing programme kept demand for sterling high as the central bank appeared to adopt a ‘wait and see’ position.
  
• However, rumours that Prime Minister Gordon Brown had resigned after lunch caused a sharp fall in sterling’s value, driving it into negative territory. This fall was exacerbated by the news the European Central Bank had left their interest rates at a historic low of 1.00% and decided not to extend their planned asset purchase programme.
  
• In trading so far today the pound has continued its slide against the single currency as investors continue to eye the UK’s fragile political situation carefully.
  
• There are no major announcements due in the eurozone today, while in the UK PPI Input (MoM) is out at 09.30 BST.

Sterling finishes down against US Dollar on political uncertainty

Sterling weakened by 1.41 cents against the US dollar yesterday, to close the day at $1.6174.

• In early trading yesterda, sterling weakened against the greenback as concerns over the dollar’s status as the world’s reserve currency abated. However, the Bank of England’s decision to keep interest rates at 0.5% and stick to its £125 billion quantitative easing programme provided some lift for sterling as investors took this as a sign the central bank’s strategy could be working.
  
• However, rumours that Prime Minister Gordon Brown was set to resign caused a sharp tumble in the pound, although this was quickly refuted as “absolute nonsense” by his office. Nevertheless, a mixed day on equity markets, coupled with a batch of profit-taking by traders after the pound’s sharp rally over the past week, drove sterling lower.
  
• In trading so far today the pound has continued its slide against the greenback, as concerns mounted over the UK’s political situation. Work and Pensions secretary James Purnell is the latest minister to quit the cabinet, and the first to openly call for Prime Minister Gordon Brown to stand aside.
  
• In the UK, PPI Input (MoM) data is out at 09.30 BST, whilst in the US Non-Farm employment figures are due at 13.30 BST.

Euro finishes up against the US Dollar

The euro strengthened by 0.24 cents (0.17%) against the US dollar yesterday to finish the day at $1.4182.

• In early trading yesterday the dollar strengthened against the euro, as the greenback’s position as the world’s reserve currency of choice was affirmed. Wednesday evening’s announcement by Fed Chairman Ben Bernanke that he saw no threat to the greenback’s number one status fuelled its gains early on.
  
• The ECB’s decision to leave interest rates on hold at 1.00% and not extend its planned asset purchase programme was taken positively by the markets, sending the euro into positive territory. However, ECB President Jean-Claude Trichet’s assessment that it was extraordinarily important for US authorities to express support for a strong dollar stifled the single currency’s gains.
  
• In trading so far today the euro has continued its rise against the greenback, as investors await important US unemployment data at 13.30 BST. There are no major announcements due in the eurozone today.

Aussie gains against sterling

The Australian dollar made gains against sterling yesterday, after stronger commodity and equity markets helped support higher yielding currencies.

• Sterling remained largely unaffected by the Bank of England’s decision to keep rates on hold, as it also stuck to its planned target for quantitative easing.
  
• Today investors will eye British Producer Price figures for further direction.

Kiwi finishes up against sterling

The New Zealand dollar strengthened against the pound yesterday, boosted by demand for higher yielding currencies.

• Investors will now turn their focus to next week’s Reserve Bank of New Zealand interest rate decision.
  
• The central bank is generally expected to follow in the footsteps of the RBA in keeping rates on hold, although some analysts feel a 0.25% rate cut may be on the cards.
  
• The statement from the central bank will be watched very closely by investors.

ECB keeps rates at 1.00%

In a scheduled announcement, the European Central Bank has kept its interest rate at a historic low of 1.00%. It was widely anticipated interest rates would be kept on hold, as the central bank continues to try and stimulate eurozone economies in the face of the global economic slowdown.

We await further details about the quantitative easing programme announced by the ECB last month as its President, Jean-Claude Trichet, is due to give a statement shortly. With low interest rates and a quantitative easing programme only recently announced, Caxton FX is expecting the euro to come under increased selling pressure in the medium-term.

BoE keeps rates at 0.50%

In a scheduled announcement, the Bank of England has kept its interest rate at 0.50% for the third month in a row. The central bank was widely expected to keep interest rates on hold following their unprecedented monetary easing since October last year. Despite the base rate remaining at a historic low, and a quantitative easing strategy already being deployed, credit conditions remain tight in the UK for businesses and individuals alike. The Bank of England is due to complete its £125 billion quantitative easing programme next month.

Pound finishes down against the euro

The pound weakened by 0.72 cents (0.62%) against the euro yesterday, to close the day at 1.1518.

• In early trading yesterday sterling hit a six-month high against the euro, as investor confidence that the UK economy may be recovering continued. A Nationwide survey showing UK consumer confidence was at its highest level for six months fuelled the pound’s early gains, as did better-than-expected UK Services PMI figures released mid-morning. It came in at 51.7 this month, well ahead of the 49.4 predicted, and also an improvement on the 48.7 recorded previously. The index’s rise above the crucial 50 mark – with a score above that level signalling growth – was a major boost to hopes of an economic recovery, with the services sector making up about 70% of the British economy.
  
• However, after lunch the pound weakened considerably against the euro, as near 2% falls on equity markets and profit-taking from the pound’s recent rally dragged the UK currency down. The FTSE 100 eventually finished the day down 93.6 points (2.09%) at 4,383.42.
  
• In trading so far today the pound has continued its slide against the euro, as investors brace themselves for today’s important announcements by t he central banks of both regions, who are due to give their latest interest rate decisions. The Bank of England will announce their decision first at 12.00 BST, followed by the European Central Bank at 12.45 BST.

Sterling falls by over 2.5 cents against the US Dollar

The pound weakened considerably against the US dollar yesterday, falling 2.62 cents (1.58%) to close the day at $1.6315.

• In early trading yesterday sterling jumped to a seven-month high against the greenback, as improved sentiment about the UK’s chances of economic recovery continued. This view was bolstered yesterday morning after the release of a surprisingly positive Nationwide consumer confidence survey, which showed people were more confident now than at any time in the past six months.
  
• In addition, better-than-expected UK Services PMI figures also buoyed demand for the riskier pound as the index came in at 51.7 points, up from 48.7 last month. The rise above 50 – the level signalling growth – was particularly significant because the recession-battered services sector makes up roughly 70% of the UK’s economy.
  
• However, news that monetary officials in China, Japan, India and South Korea would keep buying US Treasuries even if America’s credit ratings were cut bolstered the dollar mid-afternoon. Some of the dollar’s slide in the past month has been attributed to speculation that the US may have its credit rating downgraded, so these positive comments were particularly well-received, sending the greenback into positive territory mid-afternoon.
  
• The dollar’s gains were further extended in late trading yesterday after some traders booked profits from sterling’s rapid rise over the last ten days. Falls on the FTSE 100 also weighed on the pound late on, as it eventually finished over 2% down on the day.
  
• In early trading so far today the pound has weakened further against the greenback, as investors turn their attention to today’s important Bank of England interest rate decision, which is due at 12.00 BST , shortly followed by a statement. In the US, Unemployment Claims figures are out at 13.30 BST and Fed Chairman Ben Bernanke is due to give a speech at 13.45 BST.

The euro weakens by over a cent against the US Dollar

The euro weakened by 1.42 cents (0.99%) against the US dollar yesterday, finishing the day at $1.4158.

• In early trading yesterday the single currency weakened against the dollar, following comments from officials that a downgrade in the US sovereign credit rating would not put Asian central banks off buying US Treasuries. Those with a direct knowledge of Asian policymaking said there were no alternatives to the liquidity afforded by the dollar.
  
• The dollar also rose on the back of worse-than-expected US ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI figures. After their release some investors speculated that, contrary to popular sentiment recently, we may not really be on the cusp of a global economic recovery. They therefore looked to the perceived safety of the greenback to protect their capital.
  
• Falls on global equity markets did little to halt this flight to safety, with both the DOW and NASDAQ suffering falls. However, it was the confirmation from Asia that the dollar remains the world’s reserve currency of choice which really drove the greenback’s gains throughout the day.
  
• In trading so far today the euro has clawed back some of yesterday’s losses, as investors continue to digest yesterday’s less positive data and consider whether it was a reality check or just a blip on the road to recovery.
  
• The European Central Bank is to deliver its latest interest rate decision at 12.45 BST today, whilst in the US Unemployment Claims figures are due out at 13.30 BST. Fed Chairman Ben Bernanke is also due to speak at 13.45 BST.

Aussie falls on weak data

The Australian lost ground against sterling yesterday, as weak data out of the US hurt global optimism for a global economic recovery.

• The weak data led to investors taking a breather from buying riskier assets, including the high yielding aussie.
  
• Sterling was given some support after the release of surprisingly strong UK services data and consumer confidence rising to a 6 month high.
  
• Investor focus today will largely be on rate decisions by both the Bank of England and the European Central Bank.
  
• The BoE is expected to keep rates on hold, however investors will eye any further announcements on the bank’s quantitative easing programme.

Kiwi finishes down over 4 cents against sterling

The New Zealand dollar lost considerable ground against the pound yesterday after demand for risk appetite fell.

• Weak data out of the US saw equities and commodity prices fall yesterday, which in turn saw demand for higher yielding currencies drop.
  
• The kiwi's fragile economy was also exposed overnight with the announcement that prices for its top export, milk, had fallen.
  
• The government’s fiscal accounts showed a deficit NZ$7.69 billion, for 10 months, although this reading was better that what was forecast in last week’s budget.

Sterling hits its highest level against euro since early December 2008

The pound today hit its highest level against the euro since 3rd December 2008, boosted by improved investor sentiment about the state of the UK economy. Stronger-than-forecast UK Services PMI figures, together with a report released by Nationwide which showed UK consumers were more optimistic in May than they had been for six months, boosted the pound. Today’s gains cap an impressive rally for sterling against the single currency, which has risen over 4.5 cents since 11th May 2009.

Pound loses ground against the euro yesterday

The pound weakened by 0.22 cents (0.19%) against the euro yesterday to close the day at 1.1590.

• Sterling weakened against the euro in early trading yesterday, after it was announced an Abu Dhabi government-owned firm had sold roughly £3.5 billion of Barclays shares. The bank’s shares fell about 13% in early London trade as a result, as confidence in the UK banking sector diminished. The FTSE 100 as a whole was down 1% mid-morning.
  
• However, poor eurozone unemployment figures, which showed a rise to 9.2% in April, did cap the euro’s gains to some extent. This was its highest level since September 1999.
  
• Nevertheless, the euro ended the day in positive territory against sterling yesterday as falls in London equities dragged the pound down. The FTSE 100 lost 29.17 points in the day.
  
• In trading so far today sterling has strengthened against the euro, as investors turn their attention to tomorrow’s interest rate decisions from the European Central Bank and the Bank of England.
  
• There are no major announcements due in the eurozone today, whilst in the UK Services PMI figures are out at 09.30 BST.

Pound's rally against the US Dollar continues

The pound continued its rally against the US dollar yesterday, rising by 1.34 cents (0.81%) to finish the day at $1.6577.

• In early trading the pound fell from seven-month highs against the dollar, as the news that an Abu Dhabi government-owned firm had sold roughly £3.5 billion worth of Barclays shares shook confidence in the UK banking sector. The FTSE 100 dropped 1% in early trade as a result, prompting traders to lock in profits after a sharp rally for the pound over the last month.
  
• However, the dollar’s modest recovery petered out just after lunch as US stock futures turned higher, helping to renew demand for higher risk currencies like the pound. Investors also drew heart from Monday’s better-than-expected manufacturing activity surveys coming out of China, the eurozone, the UK and the US.
  
• Sterling ’s gains were also extended following the release of much better-than-expected Pending Home Sales data in the US. This month’s reading of 6.7% was well-ahead of the 0.4% analysts had expected and also a healthy gain on the 3.2% registered last month. As a core driver of the global economy, news that the US housing market may be tentatively recovering was received positively by investors, prompting them to again look beyond the safe-haven of the greenback.
  
• In trading so far today the pound has resumed its rise against the greenback as investors continue to buy into the story the UK economy is on the cusp of recovery.
  
• In the UK, Services PMI data is out at 09.30 BST, whilst in the US, ADP Non-Farm Employment Change and ISM Non-Manufacturing PMI figures are due at 13.15 BST & 15.00 BST respectively.

Euro finishes up against the US dollar

The euro strengthened by 1.43 cents (1.01%) against the US dollar yesterday, finishing the day at $1.4300.

• In early trading yesterday the euro strengthened against the dollar, as improved risk sentiment continued to sweep the market. Monday’s better-than-expected manufacturing data from China, the UK, the US and the eurozone drove the single currency’s gains throughout the day, as investors speculated we may really be on the cusp of global economic recovery.
  
• However, the worst eurozone unemployment figures since September 1999 out mid-morning dampened investor demand for the single currency to some extent. Unemployment rose to 9.2% in April.
  
• But much better-than-expected US Pending Home Sales data stoked demand for riskier currencies like the euro. With the property market such an important driver of the US economy, this month’s reading of 6.7% was a positive sign it may be on the mend. Analysts had been expecting 0.4%.
  
• In trading so far today, the euro is slightly up against the greenback as improved risk appetite continues to sweep the market.
  
• There are no major announcements due in the eurozone today, whilst in the US, two important figures are set to be released. Firstly, ADP Non-Farm Employment Change data is out at 13.15 BST, followed by ISM Non-Manufacturing PMI data at 15.00 BST.

Aussie gains as risk appetite continues

The Australian dollar made small gains against sterling yesterday, as further upbeat economic data extended investor risk appetite and boosted demand for high yielding currencies such as the aussie.

• UK data revealed an increase in mortgage approvals for April, which continued to bolster hopes of a recovery in the UK economy.
  
• However, markets still remain cautious about the turnaround, so sentiment is likely to remain slow to move.
  
• Sterling was also hampered by a fall in UK share markets, largely driven by news that an Abu Dhabi consortium had sold a large stake in Barclays Plc.
  
• Investors will seek further clues today of a possible UK recovery from the release of Services PMI figures at 09.30 BST.

Kiwi dollar weakens off recent highs

The New Zealand dollar fell off recent highs yesterday as investors proceeded to book profits on strong gains, before recovering ground overnight amid growing risk appetite.

• The kiwi still remains supported by a lift in appetite for high yielding currencies, as the wave of optimism about an economic recovery continues.
  
• This suggests the kiwi could make further gains if the momentum continues.
  
• However, analysts have warned that some indicators suggest that the kiwi is already overvalued.

Pound finishes up over 1.5% against the euro

The pound strengthened markedly against the euro yesterday, rising by 1.82 cents (1.59%) to finish the day at 1.1612.

• In early trading yesterday, the pound strengthened against the euro as strong equity market performance buoyed investor confidence that the UK’s recession may be bottoming out. London’s FTSE 100 was up 1.5% mid-morning.
  
• The pound also strengthened on the back of improved UK housing data released by property company Hometrack. It revealed that for the first time in 20 months there has been no month-on-month decline. However, house prices are still 9.6% down on a year ago.
  
• The UK currency also gained on the news that the recession-battered manufacturing industry may be ‘close to turning a corner’ according to a survey released by The Chartered Institute of Purchasing and Supply. It showed that activity last month was at its highest level in a year, as it posted a reading of 45.4 in May, still below the neutral mark of 50 but an improvement on the revised 43.1 recorded in April.
  
• Strength on London equities continued to drive sterling higher yesterday afternoon. The FTSE 100 eventually finished the day up 88.25 points.
  
• In trading so far today, the pound has pared some of the gains it made yesterday as investors start to focus on Thursday’s interest rate decisions.
  
• There are no major announcements due in the UK or eurozone today.